Depreciation, Provisions and Reserves — Account STD 11 Commerce — Question

Enter the following transactions in the Journal of Manohar Lal & Sons:

2019		₹
Jan. 6	Sold goods for cash	36,000
Jan. 8	Sold goods to Hari	30,000
Jan. 14	Received cash from Hari	18,000
Jan. 26	Received Commission	750
Jan. 27	Paid Salary to Gopal	1,200
Jan. 28	Received cash from Hari	12,000
Jan. 29	Withdrew cash from office for personal use	4,000
Jan. 30	Wages paid	7,200
Jan. 30	Bought Machinery for Cash	8,000

Rectify the following errors assuming:-
That no suspense account has been opened with difference in the trial balance.

On 1st April, 2016, a machinery was purchased for ₹ 20,000. On 1st October, 2017 another machine was purchased for ₹ 10,000 and on 1st April, 2018, one more machine was purchased for ₹ 5,000. The firm depreciates its machinery @ 10% p.a. on the Diminishing Balance Method.
What is the amount of Depreciation for the years ended 31st March, 2017, 2018 and 2019? What will be the balance in Machinery Account as on 31st March, 2019?

Journalise the following in the books of Amit Saini, Gurugram (Haryana):

1. Goods of ₹ 5,000 were taken by him for personal use.
2. ₹ 2,000 due from Sohan were bad debts.
3. Goods of ₹ 6,000 were destroyed by fire and were not insured.
4. Paid ₹ 4,000 in cash as wages on installation of machine. (GST is not to be levied).
5. Sold goods to Arjun of Delhi of list price ₹ 20,000. Trade discount @ 10% and cash discount of 5% was allowed. He paid the amount on the same day and availed the cash discount.
6. Received ₹ 2,000 from Ramesh, whose account was written off as bad debts.
7. Goods costing ₹ 1,000 given as charity.
8. Received ₹ 9,750 from Ramesh in full settlement of his account of ₹ 10,000.
9. Paid rent in advance ₹ 4,000.

​CGST and SGST is to be levied on intra-state sale @ 6% each and IGST @ 12% on inter-state sale.

A sold goods to B for ₹ 60,000 Charging IGST @18% and immediately drew a bill on Bwho duly accepted the same. A endorsed the bill to C. C endorsed it to his creditor D. Ddiscounted the bill for ₹ 68,000. On the date of maturity, the bill was dishonoured and Bank paid noting charges amounting to ₹ 200.
Show Journal entries in the books of all the parties to record these transactions.

What is meant by maturity of a bill of exchange?

What is a Bank Reconciliation Statement? Explain any four points regarding need and importance of preparing a Bank Reconciliation Statement.

A Trial Balance showed excess credit of ₹ 2,728, which were placed in a suspense account. Later on the following errors were located. Pass rectifying entries and prepare Suspense A/c.

1. ₹ 825, the total of purchase return book has been posted to the debit of sales return account.
2. Goods purchased from Suresh ₹ 1,800 recorded in Sales Book as ₹ 180.
3. An item of ₹ 328 written off as a bad debt from Ajay Sharma has not been debited to Bad Debts Account.
4. Goods purchased from X ₹ 3,500 and from Y ₹ 4,000, but were recorded in the purchase book as X ₹ 4,000 and Y ₹ 3,500.
5. Goods returned to Ramesh for ₹ 2,600 was correctly recorded in the return outward book but was wrongly posted to his account as ₹ 260.
6. A sum of ₹ 2,210 stolen by an ex-employee stand debited to Suspense A/c.
7. A sum of ₹ 500 written off as depreciation on Machinery, were not posted to Machinery account.

Pass journal entries to rectify the following errors. The trial balance had ₹ 1,260 excess credit. The difference has been posted to a suspense account:

1. The total of returns inwards book has been cast ₹ 2,000 short.
2. The purchase of an office table costing ₹ 6,000 has been passed through the purchases day book.
3. A sum of ₹ 7,500 paid to workman for wages for making showcases has been charged to wages account.
4. A purchase of ₹ 1,340 has been posted to the creditor's account as ₹ 600.
5. A cheque of ₹ 4,000 received from Y has been dishonoured; it has been posted to the debit of allowances account.

After passing journal entries, prepare the suspense account.

What do you mean by Accounting? Explain in brief any four advantages of Accounting.